Government Signals Of Possible Settlement In American Airlines-US Air Merger

WASHINGTON (Reuters) - American Airlines <AAMRQA.UL>, US
Airways <LCC.N> and the U.S. Justice Department said on
Wednesday they were open to settling a court fight over whether
the two companies should be allowed to merge, but there was no
sign of an imminent agreement.

The Justice Department filed a lawsuit in mid-August, asking a
federal court to block the deal, which would form the world's
biggest air carrier. The government said the merger would lead to
higher prices for customers, while the companies said it would
make them more competitive and strengthen the market.

In a document filed jointly by the Justice Department and the two
companies on Wednesday, the government said it was "open to a
settlement that addresses the anticompetitive harms posed by the
merger but have not yet received any such proposal from the
defendants."

In its initial complaint, the department focused on Ronald Reagan
National Airport, outside Washington, D.C., where the two
companies own a combined 69 percent of takeoff and landing slots.
It also listed more than 1,000 city pairs where the two airlines
dominate the market.

The two airlines said in the joint filing with the district court
in Washington, D.C., that they had tried to settle the case
before the complaint was filed "and continue to believe there
ought to be a realistic possibility of settlement."

Two sources told Reuters earlier this week that there had been
little or nothing in the way of settlement discussions before the
complaint was filed. A person familiar with the matter said that
the companies had offered concessions to the Justice Department
but declined to describe them.

The two sides have been at loggerheads over a trial date. The
Justice Department initially asked for a February trial and then
amended that to March. The airlines asked for a November trial.

The airlines complained about the proposed delay in a second
filing on Wednesday in which they said that the Justice
Department's proposed schedule would "place the merger at risk
regardless of its competitive benefits."

In the joint filing on Wednesday, the two sides asked the judge
to resolve the dispute at an initial scheduling conference set
for Friday.

Companies generally push for expedited trials in merger
challenges. Holding a deal together for months puts a strain on
the parties because they are essentially in limbo, unable to
merge and hampered in making independent long-range plans.

The case at the U.S. District Court for the District of Columbia
is No. 1:13-cv-012346-CKK.